The Office of the Data Protection Commissioner for Schleswig-Holstein said it would appeal

A German court ruling will allow Facebook to ban the use of fake names on the social network.

The Office of the Data Protection Commissioner for Schleswig-Holstein challenged a Facebook policy last year that requires users to create profiles with their real names only -- no nicknames or fake names allowed.

The German privacy watchdog said this policy breaches German privacy laws that allow free speech on the Internet. Facebook argued that real names were necessary to protect users.

"It is unacceptable that a U.S. portal like Facebook violates German data protection law unopposed and with no prospect of an end," said Thilo Weichert, Privacy Commissioner and head of ULD. "The aim of the orders of ULD is to finally bring about a legal clarification of who is responsible for Facebook and to what this company is bound to."

However, the German court ruled that the Irish data protection law applied in this case, where Irish data protection officials handle Facebook privacy concerns in Europe (because Facebook's European headquarters is in Ireland).

"We are pleased with the decision, [which] we believe ... is a step into the right direction," a Facebook spokesman said in a statement. "We hope that our critics will understand that it is the role of individual services to determine their own policies about anonymity within the governing law – for Facebook Ireland European data protection and Irish law. We therefore feel affirmed that the orders are without merit."

The Office of the Data Protection Commissioner for Schleswig-Holstein said it would appeal.